South Korea’s leading commercial banks are seeking ways to accelerate digitalization of their retail services with some even breaking down traditional barriers between new industry rivals in order to share ideas on boosting innovation.
Kakao Bank CEO Yoon Ho-young was invited by Woori Bank on Friday to speak about the internet-only banking giant’s success and the future of finance, Kakao Bank said. Woori’s invitation of the head of the fast-growing online banking company is seen as a rare occasion as traditional lenders have viewed platform-based firms, especially powerhouses like Kakao Bank, as industry rivals. Yoon and Woori’s executives discussed about digital innovation for roughly an hour, it said.
The meeting come as lenders have been shutting down brick-and-mortar branches to focus on their online and mobile services, while heightening competition with fintech firms have been driving them to cooperate with both rivals old and new.
In the live-streamed online strategy meeting, Woori Bank CEO Kwon Kwang-seok called for a need for swift digital innovation and enhanced efforts to become a forerunner in digital finance.
“The management goal for 2021 is digital first, digital initiative,” Kwon said.
Woori’s traditional rival Shinhan Bank, the nation’s No. 1 commercial lender by net profit, also stressed the need for digital transformation at a similar event held Friday.
“Shinhan must transform into a digital company that works as a connecting dot between its customers and the future,” Shinhan Bank CEO Jin Ok-dong said.
“It is crucial for our employees to become creative in connecting the concepts of digital and finance based on their own ‘digital literacies’ and understanding,” he added.
According to industry sources, Shinhan is planning an organization reshuffle by the end of the month, to strengthen its digital businesses and online capacity. It also plans to invest 300 billion won ($271.4 million) in building an upgraded digital banking system.
Korean commercial banks have been partnering with both local and overseas fintech firms to expand their digital horizon, as competition in the local banking sector is projected to further intensify this year. The nation’s third-internet only bank Toss Bank is expected to begin operation soon after gaining final approval for the license in the first half of this year, its main operator Viva Republica said.
The five major commercial banks here -- Woori, Shinhan, KB Kookmin, NH NongHyup and Hana -- shut down a combined 216 offline branches last year alone, industry data showed earlier this month. The trend is likely to gain momentum this year, due to a growing customer preference for contactless mobile services coupled with lingering risks stemming from the COVID-19 pandemic.
By Jung Min-kyung (firstname.lastname@example.org)
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